Penumbra, Inc. Reports Second Quarter 2019 Financial Results

ALAMEDA, Calif., Aug. 6, 2019 — Penumbra, Inc. (NYSE: PEN), a global healthcare company focused on innovative therapies, today reported financial results for the second quarter ended June 30, 2019.

  • Revenue of $134.2 million in the second quarter of 2019, an increase of 22.4%, or 23.8% in constant currency1, over the second quarter of 2018.

Penumbra, Inc. Logo (PRNewsFoto/Penumbra, Inc.)

Second Quarter 2019 Financial Results
Total revenue grew to $134.2 million for the second quarter of 2019 compared to $109.6 million for the second quarter of 2018, an increase of 22.4%, or 23.8% on a constant currency basis. The United States represented 64% of total revenue and international represented 36% of total revenue for the second quarter of 2019. Revenue from sales of neuro products grew to $81.5 million for the second quarter of 2019, an increase of 9.9%, or 11.5% on a constant currency basis. Revenue from sales of vascular products grew to $52.7 million for the second quarter of 2019, an increase of 48.6%, or 49.5% on a constant currency basis.

Gross profit was $93.9 million, or 70.0% of total revenue, for the second quarter of 2019, compared to $72.3 million, or 65.9% of total revenue, for the second quarter of 2018.

Total operating expenses for the second quarter of 2019 were $81.1 million, or 60.5% of total revenue. This compares to total operating expenses of $63.0 million, or 57.4% of total revenue, for the second quarter of 2018. R&D expenses were $13.5 million for the second quarter of 2019, compared to $8.2 million for the second quarter of 2018. SG&A expenses were $67.7 million for the second quarter of 2019, compared to $54.8 million for the second quarter of 2018.

Operating income for the second quarter of 2019 was $12.8 million, compared to operating income of $9.3 million for the second quarter of 2018.

Full Year 2019 Financial Outlook
The Company is increasing its 2019 guidance for total revenue to be in the range of $535 million to $540 million. This new range compares to the previous range of $525 million to $535 million.

Webcast and Conference Call Information
Penumbra, Inc. will host a conference call to discuss the second quarter 2019 financial results after market close on Tuesday, August 6, 2019 at 4:30 PM Eastern Time. The conference call can be accessed live over the phone by dialing (866) 393-4306 for domestic callers or (734) 385-2616 for international callers (conference id: 9790865), or the webcast can be accessed on the “Events” section under the “Investors” tab of the Company’s website at: www.penumbrainc.com. The webcast will be available on the Company’s website for at least two weeks following the completion of the call.

About Penumbra
Penumbra, Inc., headquartered in Alameda, California, is a global healthcare company focused on innovative therapies. Penumbra designs, develops, manufactures and markets innovative products and has a broad portfolio that addresses challenging medical conditions and significant clinical needs across two major markets, neuro and vascular. Penumbra sells its products to hospitals primarily through its direct sales organization in the United States, most of Europe, Canada and Australia, and through distributors in select international markets. The Penumbra logo is a trademark of Penumbra, Inc. For more information, visit www.penumbrainc.com.

Non-GAAP Financial Measures
In addition to financial measures prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), the Company uses the following non-GAAP financial measures in this press release: a) non-GAAP net income and non-GAAP diluted earnings per share (“EPS”) and b) constant currency.

Non-GAAP net income and non-GAAP diluted EPS. The Company defines non-GAAP net income as net income attributable to Penumbra, Inc. excluding a) the income tax effects from the Tax Cuts and Jobs Act of 2017 (the “Tax Reform Act”) and b) the effects of the excess tax benefits associated with share-based compensation arrangements. The Company defines non-GAAP diluted EPS as GAAP diluted EPS, excluding the effects of the same items above.

Constant Currency. The Company’s constant currency revenue disclosures estimate the impact of changes in foreign currency rates on the translation of the Company’s current period revenue as compared to the applicable comparable period in the prior year. This impact is derived by taking the current local currency revenue and translating it into U.S. dollars based upon the foreign currency exchange rates used to translate the local currency revenue for the applicable comparable period in the prior year, rather than the actual exchange rates in effect during the current period. It does not include any other effect of changes in foreign currency rates on the Company’s results or business.

Full reconciliation of these non-GAAP measures to the most comparable GAAP measures is set forth in the tables below.

Our management believes the non-GAAP financial measures disclosed in this press release are useful to investors in assessing the operating performance of our business and provide meaningful comparisons to prior periods and thus a more complete understanding of our business than could be obtained absent this disclosure. Specifically, we consider the change in constant currency revenue as a useful metric as it provides an alternative framework for assessing how our underlying business performed excluding the effect of foreign currency rate fluctuations. We consider non-GAAP net income and non-GAAP diluted EPS useful metrics as they provide an alternative framework for assessing how our underlying business performed excluding the one-time effects of the transition tax from the Tax Reform Act and the excess tax benefits associated with share-based compensation arrangements, net of any related valuation allowance.

The non-GAAP financial measures included in this press release may be different from, and therefore may not be comparable to, similarly titled measures used by other companies. These non-GAAP measures should not be considered in isolation or as alternatives to GAAP measures. We urge investors to review the reconciliation of these non-GAAP financial measures to the comparable GAAP financial measures included in this press release, and not to rely on any single financial measure to evaluate our business.

Forward-Looking Statements
Except for historical information, certain statements in this press release are forward-looking in nature and are subject to risks, uncertainties and assumptions about us. Our business and operations are subject to a variety of risks and uncertainties and, consequently, actual results may differ materially from those projected by any forward-looking statements. Factors that could cause actual results to differ from those projected include, but are not limited to: failure to sustain or grow profitability or generate positive cash flows; failure to effectively introduce and market new products; delays in product introductions; significant competition; inability to further penetrate our current customer base, expand our user base and increase the frequency of use of our products by our customers; inability to achieve or maintain satisfactory pricing and margins; manufacturing difficulties; permanent write-downs or write-offs of our inventory; product defects or failures; unfavorable outcomes in clinical trials; inability to maintain our culture as we grow; fluctuations in foreign currency exchange rates; potential adverse regulatory actions; and potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make. These risks and uncertainties, as well as others, are discussed in greater detail in our filings with the Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC on February 26, 2019. There may be additional risks of which we are not presently aware or that we currently believe are immaterial which could have an adverse impact on our business. Any forward-looking statements are based on our current expectations, estimates and assumptions regarding future events and are applicable only as of the dates of such statements. We make no commitment to revise or update any forward-looking statements in order to reflect events or circumstances that may change.

1See “Non-GAAP Financial Measures” for important information about our use of constant currency and other non-GAAP measures.

Penumbra, Inc.

Condensed Consolidated Balance Sheets

(unaudited)

(in thousands)

June 30, 2019

December 31, 2018

Assets

Current assets:

Cash and cash equivalents

$

77,261

$

67,850

Marketable investments

109,996

133,039

Accounts receivable, net

99,011

81,896

Inventories

132,735

115,741

Prepaid expenses and other current assets

15,601

12,200

Total current assets

434,604

410,726

Property and equipment, net

37,940

35,407

Operating lease right-of-use assets

42,476

Intangible assets, net

26,031

27,245

Goodwill

7,765

7,813

Deferred taxes

34,661

32,940

Other non-current assets

1,632

875

Total assets

$

585,109

$

515,006

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable

$

8,743

$

8,176

Accrued liabilities

57,276

57,886

Current operating lease liabilities

3,742

Total current liabilities

69,761

66,062

Deferred rent

7,586

Non-current operating lease liabilities

46,146

Other non-current liabilities

15,019

18,943

Total liabilities

130,926

92,591

Stockholders’ equity:

Common stock

35

34

Additional paid-in capital

419,220

415,084

Accumulated other comprehensive loss

(1,514)

(1,942)

Retained earnings

36,350

9,064

Total Penumbra, Inc. stockholders’ equity

454,091

422,240

Non-controlling interest

92

175

Total stockholders’ equity

454,183

422,415

Total liabilities and stockholders’ equity

$

585,109

$

515,006

Penumbra, Inc.

Condensed Consolidated Statements of Operations

(unaudited)

(in thousands, except share and per share amounts)

Three Months Ended June 30,

Six Months Ended June 30,

2019

2018

2019

2018

Revenue

$

134,201

$

109,638

$

262,640

$

212,339

Cost of revenue

40,273

37,386

84,802

73,530

Gross profit

93,928

72,252

177,838

138,809

Operating expenses:

Research and development

13,462

8,193

25,129

16,206

Sales, general and administrative

67,665

54,776

128,756

109,275

Total operating expenses

81,127

62,969

153,885

125,481

Income from operations

12,801

9,283

23,953

13,328

Interest income, net

784

720

1,517

1,469

Other expense, net

(71)

(340)

(47)

(630)

Income before income taxes and equity in losses of unconsolidated investee

13,514

9,663

25,423

14,167

Benefit from income taxes

(2,735)

(4,948)

(1,280)

(6,886)

Income before equity in losses of unconsolidated investee

16,249

14,611

26,703

21,053

Equity in losses of unconsolidated investee

(1,230)

(2,181)

Consolidated net income

$

16,249

$

13,381

$

26,703

$

18,872

Net loss attributable to non-controlling interest

(339)

(583)

Net income attributable to Penumbra, Inc.

$

16,588

$

13,381

$

27,286

$

18,872

Net income attributable to Penumbra, Inc. per share:

Basic

$

0.48

$

0.39

$

0.79

$

0.56

Diluted

$

0.46

$

0.37

$

0.75

$

0.52

Weighted average shares outstanding:

Basic

34,694,228

34,072,223

34,601,270

33,959,997

Diluted

36,214,321

36,116,254

36,214,362

36,030,304

Penumbra, Inc.

Reconciliation of GAAP Net Income and Diluted EPS to Non-GAAP Net Income and Non-GAAP Diluted EPS1

(unaudited)

(in thousands, except per share amounts)

Three Months Ended
June 30, 2019

Three Months Ended
June 30, 2018

Six Months Ended
June 30, 2019

Six Months Ended
June 30, 2018

Net income

Diluted
EPS

Net income

Diluted
EPS

Net income

Diluted
EPS

Net income

Diluted
EPS

GAAP net income

$

16,588

$

0.46

$

13,381

$

0.37

$

27,286

$

0.75

$

18,872

$

0.52

GAAP net income includes the effect of the following items:

Effect of the transition tax under the Tax Reform Act2

88

Excess tax benefits related to stock compensation awards

(6,745)

(0.19)

(8,090)

(0.22)

(8,989)

(0.24)

(11,454)

(0.31)

Non-GAAP net income

$

9,843

$

0.27

$

5,291

$

0.15

$

18,297

$

0.51

$

7,506

$

0.21

________________________

1See “Non-GAAP Financial Measures” for important information about our use of non-GAAP measures and further information about our non-GAAP net income and non-GAAP diluted EPS measures.

2On December 22, 2017, the Tax Reform Act was enacted into law. This new tax law, among other changes, reduces the Company’s U.S. federal statutory corporate income tax rate from 34% to 21% effective January 1, 2018. In the six months ended June 30, 2018, the Company recorded a provisional tax charge for the one-time transition tax on the undistributed earnings of its foreign subsidiaries.

Penumbra, Inc.

Reconciliation of Revenue Growth by Geographic Regions to Constant Currency Revenue Growth3

(unaudited)

(in thousands)

Three Months Ended June 30,

Reported Change

FX Impact

Constant Currency Change

2019

2018

$

%

$

$

%

United States

$

86,374

$

71,279

$

15,095

21.2

%

$

$

15,095

21.2

%

International

47,827

38,359

9,468

24.7

%

1,482

10,950

28.5

%

Total

$

134,201

$

109,638

$

24,563

22.4

%

$

1,482

$

26,045

23.8

%

Penumbra, Inc.

Reconciliation of Revenue Growth by Product Categories to Constant Currency Revenue Growth3

(unaudited)

(in thousands)

Three Months Ended June 30,

Reported Change

FX Impact

Constant Currency Change

2019

2018

$

%

$

$

%

Neuro

$

81,547

$

74,196

$

7,351

9.9

%

$

1,162

$

8,513

11.5

%

Vascular

52,654

35,442

17,212

48.6

%

320

17,532

49.5

%

Total

$

134,201

$

109,638

$

24,563

22.4

%

$

1,482

$

26,045

23.8

%

Penumbra, Inc.

Reconciliation of Revenue Growth by Geographic Regions to Constant Currency Revenue Growth3

(unaudited)

(in thousands)

Six Months Ended June 30,

Reported Change

FX Impact

Constant Currency Change

2019

2018

$

%

$

$

%

United States

$

168,885

$

137,080

$

31,805

23.2

%

$

$

31,805

23.2

%

International

93,755

75,259

18,496

24.6

%

3,748

22,244

29.6

%

Total

$

262,640

$

212,339

$

50,301

23.7

%

$

3,748

$

54,049

25.5

%

Penumbra, Inc.

Reconciliation of Revenue Growth by Product Categories to Constant Currency Revenue Growth3

(unaudited)

(in thousands)

Six Months Ended June 30,

Reported Change

FX Impact

Constant Currency Change

2019

2018

$

%

$

$

%

Neuro

$

163,018

$

145,624

$

17,394

11.9

%

$

2,922

$

20,316

14.0

%

Peripheral

99,622

66,715

32,907

49.3

%

826

33,733

50.6

%

Total

$

262,640

$

212,339

$

50,301

23.7

%

$

3,748

$

54,049

25.5

%

_________________________

3See “Non-GAAP Financial Measures” for important information about our use of constant currency and other non-GAAP measures.

Investor Relations
Penumbra, Inc.
510-995-2461
[email protected]

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SOURCE Penumbra, Inc.

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